Freeport-McMoRan (NYSE: FCX) is trading lower after a report today from analysts at Deutsche Bank painted a bleak picture for China copper demand. According to the report, inventory pressure will outstrip demand recover, and there may not be a trend toward restocking until the first quarter of 2013.

“There has been talk recently about a strong Chinese copper demand recovery for the rest of the year, driven by power investment, appliance subsidies and a recovering housing market. While we expect higher copper consumption, we feel the drivers are merely noises in the market, as high production levels and net import figures could create c.1Mt of inventories in China,” said analyst Laura Zhai.

“While we agree that the abovementioned factors will help copper consumption in the country for the remainder of the year to a certain extent, we believe it is important to point out that most of these expectations are overstated,” said Zhai, adding “without significant restocking activities, any rally in copper prices based on expectations will likely not be sustainable. We remain cautious on the sector in the short term.”